Who Pays? Wanna Guess?

Last week I launched the first of what probably will be many rants in this space. In so doing I began with “This lil brouhaha isn't getting NEAR enough press… but it’s coming, and you can bet there will be more in the VERY near future.” And, lo... the lead item on today's WSJ Opinion Journal page: “Who Pays for Cap and Trade? Hint: They were promised a tax cut during the Obama campaign.” Excerpts:

Cap and trade is the tax that dare not speak its name, and Democrats are hoping in particular that no one notices who would pay for their climate ambitions. With President Obama depending on vast new carbon revenues in his budget and Congress promising a bill by May, perhaps Americans would like to know the deeply unequal ways that climate costs would be distributed across regions and income groups.

Politicians love cap and trade because they can claim to be taxing "polluters," not workers. Hardly. Once the government creates a scarce new commodity -- in this case the right to emit carbon -- and then mandates that businesses buy it, the costs would inevitably be passed on to all consumers in the form of higher prices. Stating the obvious, Peter Orszag -- now Mr. Obama's budget director -- told Congress last year that "Those price increases are essential to the success of a cap-and-trade program."

[...]

The Congressional Budget Office -- Mr. Orszag's former roost -- estimates that the price hikes from a 15% cut in emissions would cost the average household in the bottom-income quintile about 3.3% of its after-tax income every year. That's about $680, not including the costs of reduced employment and output. The three middle quintiles would see their paychecks cut between $880 and $1,500, or 2.9% to 2.7% of income. The rich would pay 1.7%. Cap and trade is the ideal policy for every Beltway analyst who thinks the tax code is too progressive (all five of them).

But the greatest inequities are geographic and would be imposed on the parts of the U.S. that rely most on manufacturing or fossil fuels -- particularly coal, which generates most power in the Midwest, Southern and Plains states. It's no coincidence that the liberals most invested in cap and trade -- Barbara Boxer, Henry Waxman, Ed Markey -- come from California or the Northeast.

I also mentioned that I think Cap & Trade is the ultimate solution in search of a problem, but it’s worse than that… much worse. It’s a stealth tax… and a hefty one, at that… while it also foists yet another massive bureaucracy upon America… all in the name of solving a problem we can’t even agree exists. Cap & Trade is an economy killer, as well. Note (from an article — “Not all senators warming to Obama cap-and-trade emissions proposal” — in The Hill):

Sen. Sherrod Brown (D-Ohio), who opposed cap-and-trade last June, said that Obama’s plan would lead to an increase in energy costs and would drive American firms abroad.

“It really does say to manufacturing, ‘Go to China, where they have weaker environmental standards,’” Brown told The Hill. “And that’s a very bad message in bad economic times — in any economic times.”

That’s a Democrat senator speaking, no less, and I suspect the Michigan congressional delegation will join the opposition to Cap & Trade, along with other Democrats. So… perhaps there IS hope, at least in this space. Keep the change… we don’t want it and we most certainly don't need it... not now, not ever.